This document discusses the costs and cost-effectiveness of e-learning. It notes that while distance education can be cheaper than traditional education due to different cost structures, the cost-efficiency of e-learning depends greatly on the specific project design, size, and circumstances. Effectiveness is also difficult to determine and depends on the metrics and standards used. The document analyzes factors that influence the costs of developing, delivering, and supporting e-learning like method of development, media costs, teacher to student ratios, student numbers, and level of activities. It provides some examples of costs based on student learning hours for different media and notes economies of scale with larger class sizes.

1. Evaluating Investments
for E-Learning: VLE and
LMS: Cost-benefit and
cost effectiveness
assessment in E-Learning
ILO course
Management of Distance Learning
Systems
Turin 19-20 January 2005
Lecture by G. Marconato

2. Cost-efficiency
• Efficiency: the ratio of output to
input
• A system is cost-efficient if, related
to another system , its outputs cost
less per unit of input.

3. The efficiency of DL/e-
Learning
• Many research showed that distance
education (even if not technology
based) is cheaper than conventional
one
• (not all the cases taken into
consideration confirm this finding and
even if many issues on methodological
costing methodologies are opened) .

4. This is due to the nature of
cost structure:
• cost of traditional education are driven by the
labour cost of classroom teachers
• these costs are directly related to the number
of students
• in DE, the production function of education
changes: the classroom teaching is
substitute by a range of media

5. caution in making
generalisations:
• the cost-efficiency of DL much depends
on the project
– Design
– Size
– Circumstances
• there is a limit to the extent to which DL
institution can achieve economies of
scale

6. Effectiveness
• …………..is concerned with outputs
• an organisation is effective to the extent
that it produces outputs that are
relevant to to the needs and the
demand of its clients

7. effectiveness against an
absolute standard
• the ratio of actual outcome to the
possible or ideal outcome
• Eg: from many studies, the completion
rate for DE courses is often fairly low.
Drop-out rates around 50% are not
unusual

8. effectiveness against a
relative standard
• to compare the relative effectiveness of
DE with traditional institution
• using a pass-rate approach: many
studies doesn’t displays a clear
effectiveness for one over the other

9. quality indicators
• perhaps we should use quality
indicators for educational settings, such
as the value added performance
indicators : the change of students’
performance during their time at the
institution (entry and exit test). For DE
courses not enough studies have been
carried out in this direction.

10. Cost benefit
• The private rate of return to the
individual (education provides
individuals with utility like any other
goods or services)
• The social rate of return (society as
a whole benefits from the investment
in education)

11. Some findings from a
research
• Private rate of return almost exceed
the social
• In general return is higher in less
developed countries
• The return of primary education is
greater than that of secondary

12. Return for ODL
• Conventional school: 10%; distance
course: 27% (High School in Korea)
• In other cases the discovered lower
private return of DL have to be
attributed to the higher age of
people attending DL so they can
benefit from the investment in a
shorter job life span

13. %
• Employers benefit from ODL
reducing travel and subsistence
allowance costs and time off the
work-place
(D. Rumble, The cost and Economics of
ODL)

14. Conclusion
• Distance learning can be effective, but
in general far less is known about its
effectiveness than about its efficiency
• G. Rumble, The Costs and Economics
of Open and Distance Learning 1997

15. Conclusion….. and beyond
• Why ODL and ICT-based education
must be cost-effective and cost-
efficient when compared to
conventional educational mode?

16. Driving forces towards
cost-saving
• Number of people needing/wishing to
gain a higher educational level for
personal and economic reasons
• Decreasing of public budget allocated
to education and training
• Economic and social forces that pull
towards a Life-long Learning
approach to education

17. Not only costs
• The cost-side of education is only
one side of education policy;
• The other, and much more important
is: the quality of the learning
experience (what a people learns and
can do with what has learned)

18. What is a high cost?
• A learning system that
doesn't cost much but that
produce low level outputs
(private and social), costs too
much

19. • You can learn from a book …but
• …. a library is quite different from a
learning centre

20. From which points of
view to consider ODL and
ICT?
• Which are your organisation/institution’s
social, economic and learning long-terms
aims?
• In which environments will you act?
• Which are the best educational “tools” at
your disposal to gain the result expected
in the context of resources, opportunities,
threatenings you must to confront with?

21. Your educational aim is…
• …………..to deliver information
or…
• …. to develop knowledge and
competencies?

22. Your educational aim is…
• …what people remember/can
repeat at the end of the
course, or….
• …. what they can do in their
lives or in their jobs with that
knowledge?

23. Looking at from these
backgrounds …..
• ODL and ICT are nothing but…..
• ….two of the “tools” into your tool-
box…
• …to be chosen when and where they
are what you really need (are
coherent with the context you have
to act on)

24. Cost-benefit & cost-
effectiveness in
e-learning
From T. Bates, National Strategies for
e-learning in post-secondary education
and training. IIEP.UNESCO 2001

25. …it is always possible to do things
more cheaply if one is prepared to
sacrifice quality

26. • E-learning is not a cheap alternative
to face-to-face teaching
• Its main benefit is to improve the
quality of instruction, rather than
reduce cost

27. • The average cost per student of e-
learning, in general, will be greater than
the average cost per student of traditional
distance education
• For course enrolling less than 100 students
per course offering, the cost difference
per student between e-learning and
traditional DE are slight

28. • The direct cost will be roughly
similar to face-to-face teaching for
course enrolling between 20 to 30
students per course offering, over a
five-year period

29. • For course with less than 20 enrolments,
the direct costs of face-to-face teaching
are likely to be lower than for e-learning
• For course with more than 30 enrolments
the direct costs of e-learning per student
are likely to be slightly lower (with a
similar student/teacher ratios for both
methods)

30. • With a large number of enrolment and if
teacher/student ratios are maintained, e-
learning becomes progressively cheaper
than face-to-face teaching
• Both forms of teaching become
progressively cheaper per student if class
size are increased without maintaining the
same teacher/student ratio, but quality of
interaction with students will drop.

31. • Face-to-face teaching has very high
indirect/overhead (building..); the
indirect costs of e-learning have not
been well researched, but appear to
be substantially lower

32. • For part-time or working adults who
already have a computer and
Internet access, e-learning could
result in considerable cost-saving
such as travelling and lost work time

33. • The benefit of e-learning are much
clearer for working adults and more
mature students,
• There re also benefits for younger
full-time students if e-learning is
combined with face-to-face teaching,
although costs are likely to be higer

34. • Few institution are making large
profits so far from e-learning
• The market, however, is limited to
certain areas such as continuing
professional education, business
programme, information techologies

35. Factors influencing the
costs of e-learning

36. Method of developing
and delivering e-learning
• Individual professor working alone to
develop learning materials and to deliver
student support: lower costs but lower
products and services quality
• Project team (project management
approach): members of a team with
different skills develop product and
services needed working within time and
budget constrains: more costly but
“professional” standard outcomes

37. Media costs
• Broadcasting, specially TV, requires heavy
up-front costs, justified only with very
large number of students (over 1.000)
• Web-based course that requires a lot of
multimedia production costs can vary from
$ 10.000 to $ 25.000 for a CD-ROM: the
same large number of students to justify
the costs

38. Teacher/students ratio
• The higher the class size, the lower
cost per student
• … but the individual teacher/student
interaction decreases
• … and is necessary to move towards a
more transmissive instructional
methods

39. • In on-line distance education, instructor
has to organize and participate in the on-
line discussion forum
• ….. the on-line instructor can handle fewer
students per course than a print-based
distance educator tutor
• …. thus there are lower economy of scale
for on-line teaching than for traditional
print-based teaching

40. To lower the costs…
• … you can use a lower paid adjunct
instructor instead of a research professor
or of a subject expert, or
• ….. you can design the web-based course so
that there is a little on-line
discussion/work or interaction with the
instructor
Quality is sacrificed to save money

41. Student number and number of
times a course is offered
• Because of fixed cost in the
development of a on-line course
• … course costs have to be averaged
over the life of a course to take
account of student numbers over the
whole course

42. Level of activity
You need to spread over a large number
of course to be viable some costs as
• Setting up administrative system
(online registration, fee payment)
• Instructional design
• Server maintenance

43. For a smaller number of courses you could
• outsource some organisational activities,
or
• set up a central unit that supports e-
learning activities
• The latter, usually brings an increase both
in quality and in costs saving

44. • For e-learning to be economically
justified, it is necessary to act
strategically and restructure activity

45. • One of the main benefit of technology-
supported training comes from increasing
interaction in on-line discussion forums,
this facilitating critical thinking and active
learning
• Thus e-learning, rather reducing costs,
helps to increase the quality of learning

46. An incorrect assumption
• The introduction of e-learning is a
zero-based funding issue

47. It has been shown that…
• E-learning is not a cheap option to
face-to-face teaching
So
• E-learning must be approached in the
same way as any other new line of
business
• It needs investments

48. • The main benefit of the investment
in technology is not so much to
reduce costs as to gain competitive
advantage

49. • The main advantage for a public
institution and governments investing
in e-learning is not likely to save
money, but improve the quality of
learning, and to develop workforce
skills that will eventually facilitate
economic development

50. • Governments and institution that
think that e-learning can successfully
introduced without additional
investment should not go this route

51. Cost analysis of e-
Learning applications

52. Resources generating
costs/expenditures
• Human resources
• Premises and accommodation
• Equipment and furniture
• Stocks, supplies, consumables,
expenses

53. Activities generating
costs
• Designing course
• Producing learning materials
• Delivering learning materials
• Supporting learning activities
• Advertising courses
• Managing the overall activity

54. Main Activities
generating costs
• Producing learning materials
• Supporting learning activities

55. Producing learning
materials
The main variable in costing is the
media used:
- lower in print-based material
- higher in technology based
material

56. some data for technology
based material
Parameter: SLH – Student Learning
Hour
• SHL for print is £350
• SHL for CD-ROM £13.000
• SHL for TV £121.000
(Hulsmann: The Cost of Open Learning: a Handbook,
2000)

57. Academic work to produce 1
hour of student learning (1)
Lecturing 2-10
Small group teaching 1-10
Teaching by telephone 2-10
Video-tape lectures 3-10
Audiovision 10-20

58. Academic work to produce 1
hour of student learning (2)
Teaching texts 50-100
Broadcast television 100
Computer-aided learning 200
Interactive video 300
(Sparkes cited by Rumble in : the costs and
economics of open and distance learning, 1997)

59. different SHL cost for
print
At Anglia Polytechnic Univ. £139
At NKS Norway £ 856
At the UK Open University £ 1.500
(Hulsmann: The Cost of Open Learning: a Handbook,
2000)

60. referred to the type of
communication
Asynchronous course development:
1.321 hours spent
Synchronous course development: 144
hours spent
(Hulsmann: The Cost of Open Learning: a Handbook,
2000)

61. but…..
Tutoring time devoted to tutor in a
asynchronous course is far less than
doing it in a synchronous one

62. Student support (1)
Types of interaction:
- correspondence tuition
- Face-to-face tuition
- Two-way-radio (short-wave receive
and transmit set)
- Telephone tuition

63. Student support (2)
- Audio-conference
- Narrow-band satellite transmission
- Video-conferencing
- Computer conferencing
- Electronic mail

64. Supporting learning
activities
A general framework for
understanding learning activities
technology-based and its related
activities and costs

65. the framework
dimensions
The learning experience set
• Classroom-based
• At a distance
Type of learning
• Supported self-learning
• Collaborative learning

66. framework dimensions
Supported self-learning
Classroom-based At a distance
Collaborative learning

67. Supporting learning
activities costs 1
Supported self-learning
• High learning material development costs
level (learning materials must be self-
standing – see: CD-ROM's, Courseware)
• Low student assistance costs level
(tutor/teacher intervention only on-
demand)

68. Supporting learning
activities costs 2
Collaborative learning
• High student assistance costs level
(tutor/teacher intervention is the
core of the learning experience)
• Low learning material development
costs level (learning materials could
have a row format – such as a
knowledge base)

69. Economic advantage of China’s RTVUE China’s
Radio and TV Universities Education (1)
• the per-student cost is much lower
(25%) than that of conventional
universities System
(Economics of Distance Education, OL Institute of
Hong Kong. 1994)

70. Economic advantage of China’s RTVUE China’s
Radio and TV Universities Education (2)
• From the single-item variables (student-
teacher rate, student-staff rate, per
student allocated capital value, per
student occupied building area, campus
area), RTVUEs has an economic
advantage in the efficient use of various
educational resources in comparison with
conventional universities

71. Volume of activity and
costs
The case of Forest College – garden design
course
Student no. 837 cost per student £139,23
1000 £132,79
1350 £126,11
1700 £122,11
Rumble, the costs and economics of open and distance learning,
1997)

72. Break-even point
between traditional ed.
and OL
The case of Stonehill College of Advanced
Technology:
In traditional format course: 20 students
for covering the costs
In OL format course: 32
Passing the numbre of 32 students, the OL
course will be cheaper than the traditional
methods
Rumble, the costs and economics of open and distance learning,
1997)

73. Case study - costs
Copernicus Project at the Province
of Bolzano (Italy)
By G. Marconato &
I. Keymeulen

74. SCR – Shared Resources
Centre
Phase one: basic resources set up
costs

75. Systems Components Description Cost $
Central Technological Infrastructure n. 4 Server 40.000
Virtual Learning Environment (basic functions) 80.000
Dispersed Technological Infrastructure Using existing learning centres 50.000
Staff development Tutors course 500 hrs 170.000
Tutor course 120 hrs 34.000
Learning materials and training activities ICT Learning packages (in Italian and
German))
20.000
ICT Training activity 200 learners 160.000
Training activity for civil servant (300 learners) 160.000
SCR didactic services Support training activities to be implemented
during the phase
20.000
Supervision for these activities 30.000
Project site set up and development of the data
base on e-learning
20.000
Project Management and advertising 80.000
total $ 824.000

76. SCR – Shared Resources
Centre
Phase two: System upgrading costs
(three years activity)

77. Systems Components Description Cost $
Central Technological Infrastructure n. 1 Server streaming audio video 10.000
Virtual Learning Environment (Upgrading) 30.000
VLE integration with synchronous communication
functionalities and collaboration tools
50.000
Dispersed Technological Infrastructure 6 Learning Centres set up 3.000.000
Staff development One further Tutors course 500 hrs 170.000
One further Tutor course 120 hrs 34.000
Learning materials and training activities Upgrading ICT Learning packages (in Italian and
German))
40.000
Training courses for 1.500 learners 1.200.000
SCR didactic services Support trainers and tutors involved in the training
activities
30.000
International research on on-line learning
environment
30.000
Upgrading the e-learning database 20.000
Project Management and advertising 40.000
total $ 4.650

78. Choosing the “platform”
VLE/LMS choice and
costs

79. License Cost per Users ($)
No. of users
LMS 300 1000 3000 notes
DOCENT (full
options)
150 120 80 No-time limit
license
Web-Ct 4 Per year rate
licence
Hyperwave 256 118 75 No-time limit
license
Smart Force 36 20 13 Per year rate
licence